Citizen Harry: The Levy Committee, Meeting 1

Edmonds resident Harry Gatjens is providing regular reports to My Edmonds News on the workings of the 2010 Citizens Levy Committee. You can also read his story chronicling his recent quest for the vacant Edmonds City Council seat here.

July 28: Meeting One

The City Council of Edmonds has established a citizens committee to look at how, when and whether a levy should be put before Edmonds residents. The levy idea is a result of the national economic downturn, which leaves our city — like nearly every city — with less income to pay its expenses. The job of the committee is to study the situation and make one or more recommendations to the City Council. To do this, we meet twice monthly.

The first meeting was held this past Thursday at the Brackett Room at City Hall. There are eight members: Jesse Beyer, John Carlin, Barbara Chase, myself, Darrol Haug, John Reed, Bill Vance and Evelyn Wellington. All members were there except John Carlin, who was out of town. We started off with introductions and brief synopses of who we each are and why we were here. Each of us was appointed by the City Council, and one by the Mayor, but several of us had never met before.

Also at the meeting were Committee Chair Diane Buckshnis and Finance Chair Michael Plunkett, both City Council members, as well as City department managers Stephen Clifton and Debbie Human, and three or four spectators. (It’s a public meeting, so all are welcome.) Council President Steve Bernheim, who had another engagement that evening, stopped by to wish us success.

Ms. Buckshnis had prepared for each of us sizable briefing books, which contained a large amount of background material. We went over what was in the background materials, and several members of the committee had questions that were answered by the two council members and City department managers.

It was explained that our primary purpose is to look at the City’s general fund and the potential need for a levy, then consider the potential of a capital levy after the general fund analysis is complete. We aren’t to consider other City funds (such as Cemetery Improvement Fund, Building Maintenance Fund or Equipment Rental Fund), as they are beyond the scope of our charge.

However, it was pointed out that several of these other funds could affect the general fund if their specific revenues may not cover their intended purposes. An example is the REET 125 fund, which is the Real Estate Excise Tax, a portion of which is dedicated for Capital Acquisitions. For 2010, this fund has expected revenues of $560,000 but a debt service obligation of $700,000, or a deficit of $140,000. While the fund currently has a positive $540,000 balance because of past surpluses, that balance could be eaten away in a few years if the revenue and obligations do not change. Once the surplus is used up, the annual deficit would need to be paid out of the general fund. As our committee is trying to look out for the City’s interests over the next five years, these sort of things need to be considered.

There was a semi-heated discussion over how we got into this position. Questions arose such as, “Who was to blame?” and “Was the City mismanaged in the past?” Two things came out of this discussion. First, the purpose of this committee is not to assign blame about the past but rather to find solutions that can work now and in the future. Second, Mr. Clifton pointed out that each year the City begins with a budget that is projected to stay balanced for the year. However, in the last couple of years, the economic downturn and resulting unplanned loss of revenues has squeezed City income below projections and forced the budget out of balance. Hence, deficits result even when a the budget begins as a balanced plan. This is a good reason to be sure that the next budget does not have overly optimistic revenue projections.

Next, questions were asked about what our recommendations might be, and what impact they might have. Do we really have any say as to what happens in the City’s future? Could we recommend a levy to allow for new government services? Could we recommend against a levy and leave the City Council to reduce expenses and live within current revenues? We learned that our recommendations will go to the Council, which has the final say about the City’s financial matters. We are free to make whatever recommendations we choose — the caveat being that we must have solid reasoning behind them.

In my view, the budget is critical to reaching an answer about a levy, because a budget and a levy (or any income) have to work hand-in-hand to be successful. There’s give and take on both sides. However, the budget is not to be reviewed by our committee in any official or quasi-official manner. Even so, our research is likely to produce questions about the budget that will help the City Council to analyze and act on it. The job of the City Council, the Mayor and the City department heads is to write the budget. Our job is to raise topics that might help them manage the City’s finances in the most prudent way.

We ended the meeting with a presentation by committee member Jesse Beyer, who outlined the differences between public-sector accounting and private-sector accounting. For those of us who have mostly private sector accounting and little governmental accounting in our backgrounds, it was an informative overview.

Our charge before the next meeting is to review the information in our briefing books and then come up with a strategy for attacking the issues. The next meeting is scheduled for Aug. 9 at 6 p.m. at the Brackett Room at City Hall. Any Edmonds resident is welcome to come and listen.

9 COMMENTS

My apologies to Jesse Beyer for not following up well with her presentation. In governmental accunting there is no Income and Expense. It is Revenue and Expenditures. I used the tems interchangably when writing the article. I should have made better use of the education she provided.

Having been one of the spectators at the meeting I can attest that Harry has given a very accurate report on what transpired. I will not be attending all of the future meetings, so I’ll look forward to reading these reports. Harry, thank you for voluntarying to do this.

Harry,
Thank you for doing this! Some of us are numerically challenged and your approach is forthright, and very comprehendible (even for me!). thank you, thank you thank you, thank you, thank you!!. I look forward to reading your notes!

Thank you for keeping us informed of your work on the committee. There are going to be three options. Your committee will recommend specific cuts in the budget, or you will recommend a levy, or there will be a combination of both a levy and budget cuts. Those on the committee are going to be sharing with the citizens of Edmonds some negative news. I suggest that you get the signed support of all Edmonds City Council Members before you formally make your recommendations public. Some of you on the committee may still wish to serve on the Edmonds City Council in the future. Let all seven Council members take the full credit for your recommendations. If a Council member is not on board, have them come up with a better solution.

Ron B. Thank you for that thoughtful and informative posting. I had no idea about the accounting problems the City has, or the SOA citiations. It was a great posting with lots of information in a digestible format and eductional. Thank you your obvious knowledge and for sharing it so clearly!

Back many years in the 70s and 80s Edmonds enjoyed the long time services of a budget director named Art Hauser. He appeared at most Council meetings with a large notebook. And he was fully prepared to answer most questions of Council members and citizens on the spot. Occassionally he would say something like “I don’t know but I’ll find out”. and he would then call the person the next day with the answer. The current situation is quite different.

In those days the budget director was a semi-permanent fixture, not like the last ten years, with its 4 or is it 5 different budget directors. Computers were not yet around, and indeed, calculators were just showing up. With these tools things should now be a lot simpler to understand, yet here we are, stuck with one big non-transparent mess.

I suspect Mr. Hauser is still around in the area and would likely be willing to provide some real good and simple guidance to the Council or Budget/Levy committee that would help quicken our rescue from the budget insanity of the past ten years.

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